The abdication of insured property into the hands of another, or into the possession of no one in particular

Absolute Liability

Liability that arises from an extremely dangerous situation. Often found in cases involving explosives. Also known as "strict" liability. For example, you are absolutely liable if you keep a wild animal as a pet.

Accident

An unplanned, unforeseen event which occurs suddenly and at a specific place

Actual Cash Value

The required amount to pay damages for property loss, which is calculated based on the property's current replacement value minus depreciation

Additional Coverage

A provision in an insurance policy that allows for more coverage for a specific loss expense without an increase in premium

Additional Insureds

Individuals or business that are not named as insured on the declaration page, but are protected by the policy, usually in regard to a specific interest

Adhesion

A contract offered on a "take-it-or-leave-it" basis by an insurer, in which the insured's only option is to accept or reject the contract. Any ambiguities in the contract will be settled in favor of the insured.

Admitted Insurer

An insurer to which a state insurance department has granted a license to do business within that state.

Adverse Selection

In general, the tendency for people with the greatest probability of loss to be the ones most likely to purchase insurance.

Agent

An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer

Aggregate Limit

The maximum amount an insurer will pay for all covered losses during the covered policy period

Agreed Value

A property policy with a provision agreed upon by the insurer and insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written.

Aleatory

A contract in which participating parties exchange unequal amounts. The amount the insured will pay in premiums is unequal to the amount the insurer will pay in The event of a loss.

Alien Insurer

An insurance company that is incorporated outside The U.S.

Apparent Authority

The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

Appraisal

An assessment of property to determine either the correct amount of insurance to be written or the amount of loss to be paid

Arbitration

A process, agreed to by parties to a dispute in lieu of going to court, by which a neutral person or body makes a binding decision

Assignment

The transfer of legal right or interest in an insurance policy, in P&C usually only valid with prior written consent of the insurer

Authorized Insurer

An insurance company that has qualified and received a Certificate of Authority from The Department of Insurance to transact insurance in the state.

Auto

A land motor vehicle, trailer or semi-trailer designed for use on public roads

Avoidance

A method of dealing with risk by deliberately keeping away from it (e.g. if a person wanted to avoid the risk of being killed in an airplane crash, he/she might choose never to fly in a plane).

Bailee

One who holds the personal property of another for a specific purpose

Beneficiary

The one who receives the proceeds from an insurance policy

Binder

A temporary insurance contract that forms an oral or written agreement between the insurance company and the customer.

Blanket Bond

A type of bond that covers losses caused by dishonest employees

Blanket Insurance

A single property insurance policy that provides coverage for multiple classes of property at one location, or provides coverage for one or more classes of property at multiple locations.

Bodily Injury Liability

Insurance that protects a driver from claims resulting from injuries or deaths for which the insured is at fault

Boycott

An unfair trade practice in which one person refuses to do business with another until he or she agrees to certain conditions.

Builder's Risk Coverage Form

This coverage form provides coverage for buildings that are under construction. Can also be used to cover a building while additions and alterations are being made to the structure.

Building and Personal Property Coverage Form

A commercial property form that covers buildings, and/or their contents.

Burglary

Entering a building unlawfully with intent to commit a felony or to steal valuable property

Cancellation

The termination of an in-force insurance policy by either the insurer or the insured prior to the expiration date shown on the policy

Casualty Insurance

A type of insurance that is primarily concerned with the legal liability for losses caused by injury to persons or damage to the property of others.

Cease and Desist Order

A demand of a person to stop committing an action that is in violation of a provision.

Certificate of Authority

A document that authorizes a company to start conducting business and specifies the kind(s) of insurance a company can transact. It is illegal for an insurance company to transact insurance without this certificate.

Certificate of Insurance

A legal document that indicates that an insurance policy has been issued, and that states both the amounts and types of insurance provided.

Claim

A demand made by an insured to cover a loss protected by the insurance policy

Class Rating

The practice of computing a price per unit of insurance that applies to all applicants possessing a given set of characteristics.

Coinsurance

A cost-sharing provision requires the insured to assume a portion of the cost of covered services.

Combined Single

This coverage type is a single dollar limit of liability applying to the total of damages for bodily injury and property damage combined resulting from one accident or occurrence.

Commercial Lines

Insurance coverages for businesses, commercial institutions, and professional organizations.

Commissioner

The chief executive and administrative officer of a state insurance department.

Decisions and opinions of courts that are based on local customs and habits of an area within a particular country or state

Complaint

A written statement of a liability claim given by the claimant; a reason for a law suit

Components

Factors that determine rates, including loss reserves, loss adjusting expenses, operating expenses and profits

Comprehensive Coverage

The portion of an insurance policy that protects an individual against automobile damages or losses other than collisions. It includes damages and losses due to fire, vandalism, or Theft.

Concealment

The withholding of known facts, which if material, can void a contract

Conditional Contract

A type of an agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable.

Conditions

The section of the policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy

Consideration

Anything of value given to induce entering into a contract; it may be money, personal services, payment of premiums, for return of coverage

Consultant

An individual who provides professional advice or services for a fee, regarding the benefits, advantages or disadvantages promised under a policy of insurance

Consumer Reports

Written and /or oral statements regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources.

Contract

A binding agreement between two or more persons that is enforceable by law

Controlled Business

An entity that obtains and possesses a license solely for The purpose of writing business on the owner, immediate family, relatives, employer and employees.

Concurrent Causation

Multiple events leading to one loss

Death Benefit

The amount payable upon the death of the person whose life is insured.

Declarations

The who, what, where, when, how of the policy. Also includes premiums

Deductible

A set amount that the holder of an insurance policy must pay for each loss before the insurance company pays out.

Defamation

An unfair trade practice in which one agent or insurer makes an injurious statement about another with the intent of harming the person's or company's reputation.

Deposit Premium Audit

A condition that allows the insurer to audit the insured's books or records at the end of the policy term to make sure adequate premium has been collected for the exposure.

Depreciation

Any decrease or loss in value caused by age, wear, or market conditions

Direct Losses

Physical damage to buildings and/or personal property as a result of direct consequence of a particular peril.

Director

The head of the state department of insurance

Disability

A mental or physical impairment that substantially limits one or more major life activities.

Disclosure

An act of identifying the name of the producer, representative or firm, limited insurance representative, or temporary insurance producer on any policy solicitation.

Domestic Insurer

An insurance company that conducts business in the state of incorporation.

Domicile of Insurer

Insurer's location of incorporation and the legal ability to write business in a state.

Economic Loss

The estimated total cost of and accident, both insured and uninsured

Endorsement

A document, agreed to by both parties, that is attached to the policy and modifies or changes the original policy in some way.

Estoppel

A legal impediment to denying a fact or restoring a right that has been previously waived

Excess Policy

A policy that only pays for loss after the primary policy has paid its limit

Exclusions

Causes of loss, exposures, conditions, etc. listed in the policy for which the benefits will not be paid.

Exclusive or Captive Agent

An agent who only represents one company and is compensated by commissions

Experience Rating

Method of determining the premium based on the insured's own past loss experience

Exposure

A unit of measure used to determine rates charged for insurance coverage

Express Authority

The authority granted to an agent by means of the agent's written contract

Extensions of Coverage

A provision in some property policies which allows the extension of a major coverage to apply to specific types of loss to property not specifically insured.

FAIR Plan

Fair Access to Insurance Requirements plan is a state-run program that makes insurance obtainable to those in high risk areas who have been unable to acquire insurance through other channels.

Fiduciary

An agent/broker who handles insurer's funds in a trust capacity

First Named Insured

The individual whose name appears first on the policy's declaration

Flood

An unusual accumulation of water that overflows from rivers, lakes and The Ocean onto land that is not normally covered by water.

Foreign Insurer

An insurance company that is incorporated in another state.

Fraternal Benefit Society

A life or health insurance company formed to provide insurance for members of an affiliated lodge, religious, or fraternal organization with a representative form of government.

A deception deliberately practiced in order to secure unfair or unlawful gain.

Functional Replacement Cost

The cost of replacing damaged property with similar property that performs the same function but might not be identical to the damaged property.

Gross Negligence

Reckless behavior that shows disregard for the safety or lives of others

Hazard

A circumstance that increases the likelihood of a loss

Moral Hazard

The effect of a person's reputation, character, living habits etc., on his/her insurability

Morale Hazard

The effect of a person's indifference concerning loss has on the rest to be insured, lack of respect for danger

Physical Hazard

Hazard that arises from the physical characteristics of an individual, such as disability due to current circumstance or a condition present at birth

Implied Authority

Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal.

Indemnity

Compensation to The insured that restores them to the same financial position that they enjoyed prior to the loss

Independent Agents

Agents that sell insurance for multiple companies and work for themselves or other agents

Indirect Losses

Losses resulting from a peril but not directly caused by it, business disruption, rent insurance, extra expenses

Inflation Guard

A coverage extension that automatically increases amounts of insurance on buildings by an agreed upon percentage annually

Insurable Interest

Any interest an insured may have in property that is the subject of insurance so that damage or destruction of that property would cause the insured financial loss

Insurance

The transfer of the possibility of a loss (risk) to an insurance company, which in turn spreads the cost of unexpected losses to many individuals

Insurance Policy

A written contract between the insured and an insurance company that promises to pay for all or part of a loss

Insured

An individual who is covered by an insurer

Insured Contract

A definition on liability forms that describes the types of contracts in which liability is assumed by the insured and included for coverage in the policy. Examples of insured contracts are leases of premises, elevator maintenance agreements, easement agreements, and other agreements related to the insured's business.

Insurer

The insurance company that provides planned protection against economic losses

Insuring Agreement

A statement in an insurance policy that the insurer will, under described circumstances, make a loss payment or provide a service.

Intentional Tort

Any deliberate act that causes harm to another person

Interline Endorsement

A written amendment designed to eliminate redundancy and minimize the number of endorsements in the policy

Judgment Rating

An approach used when credible statistics are lacking or when the exposure units are so varied that it is impossible to construct a class

Law of Large Numbers

A principal stating that the larger number of similar exposure units considered, the more closely the losses reported will equal the underlying probability of a loss

Legal Liability

A liability under the law that occurs when a person is responsible for injuries or damages to another due to negligence

Liability

Responsibility under The law

Liberalization

A property insurance clause that extends broader legislated or regulated coverage to current policies, as long as it does not result in a higher premium

Lien

A charge, security, or encumbrance on a property

Limit of Liability

The maximum amount for which an insured is liable

Lloyd's Association

Organizations that provide support facilities for underwriters or groups of individuals that accept insurance risk

Loss

The reduction, decrease or disappearance of value of the person or property insured in a policy by a peril insured against

Loss Payable Clause

An insurance provision authorizing payment in The event of loss to a person or entity other than the named insured having an insurable interest in the covered property

Loss Ratio

A calculation used by insurance companies to relate income from loss expenses (incurred losses + loss adjusting expense) / earned premium =?

Loss Valuation

A factor in determining the premium charged and the amount of insurance required

Market Value

A seldom used method of valuing a loss based upon the amount a willing buyer would pay to a willing seller for the property prior to loss

Misrepresentation

A false statement or lie that can render a contract void

Monocline Policy

A policy written separately as a single coverage

Mutual Assessment Insurer

A mutual insurance company with three rights to assess a policy holder's additional amounts of premium to meet operational needs

Mutual Companies

Insurance organizations that have no capital stock, but are owned by the policy holders

Mysterious Disappearance

A disappearance of property that cannot be explained as to the location, time or manner of the property loss

Named Insured

The individual(s) whose name appears on the policy's declaration

Named Peril

The cause of loss specifically covered by the insurance policy. No coverage for unlisted perils

Negligence

The failure to use the care that a reasonable prudent person would under the same circumstances

No benefit to Bailee

A provision that includes any assignment or granting of any policy provision to any person or organization holding, storing, repairing, or moving insured property for a fee

No admitted insurer

An insurance company that has not applied, or has applied and been denied a certificate of authority and may not transact insurance

Nonrenewal

A termination of a policy by an insurer on the anniversary or renewal date

Notice of Claim

A provision that spells out an insured's duty to provide the insurer with reasonable notice in The event of a loss

Occurrence

A broader definition of loss, which differs in an accident that it includes losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected

Open Peril

Term used in property insurance to describe the breadth of coverage provided under an insurance policy for that insures against "any risk of loss' that is not specifically excluded

Pair and Set Clause

A clause included in many property and inland marine policies which provides that The insurer is not obligated to pay for The total value of a set of items if only one item has been lost, damaged or destroyed

Partnership

A legal entity in which 2 or more persons agree to share the profits and losses of the business

Passive

A description of an anti-Theft device or system for autos which is activated automatically when the driver turns the ignition key to the off position and the key is removed

Peril

The cause of a possible loss

Personal Injury Liability

Legal responsibility for an injury to The character of another person caused by libel, slander, false arrest, invasion of privacy or other acts

Personal lines insurance

Type of coverage available to individuals and families for non-business risks

Policy Limits

The maximum amount and insured may collect, or for which an insured is protected under the terms of the policy

Policy Period

A period of time a policy is in effect

Policyholder

A basic, fundamental insurance policy which pays first with respect to other outstanding policies

Policy owner

The person who is entitled to exercise the rights and privileges in the policy, this person may or may not be the insured

Premium

A periodic payment to the insurance company to keep the policy in force

Pro Rata

Proportional distribution of shares of the loss for each insurance policy written on a piece of property

Producer

A person who acts on the behalf of the insurer to sell, negotiate or effect insurance contracts, also known as agent

Proof of Loss

A sworn statement that must usually be furnished by the insured to an insurer before any loss under a policy can be paid

Property Damage Liability

Legal liability arising from physical damage to tangible property of others caused by the negligence of the insured

Proximate Cause

An act or event that is the immediate or actual cause of a loss

Pure Risk

Situations that can only result in a loss or no change; a gain is never possible. Only type of risk insurance companies is willing to accept

Rebating

Any inducement offered in the sale of insurance products this is not specified in the policy

Reciprocal

Insurance resulting from an interchange of reciprocal agreements of indemnity among persons known as subscribers

Reduction

Lessening the possibility or severity of a loss

Reinsurance

A form of insurance whereby one insurance company in consideration of a premium paid to it agrees to indemnify another insurance company for part or all of its liabilities from insurance policies it has issued

Replacement Cost

The cost to replace damaged goods with like kind and quality at current price without any deduction for depreciation

Representations

Statements made by the applicant on the insurance application that are believed to be true, but are not guaranteed to be true

Retention

A method of dealing with risk by intentionally or unintentionally keeping a portion of it for the insured's account; the amount of responsibility assumed but not reinsured by the insurance company

Retrospective Rating

A self-rating plan under which the actual losses during the policy period determine the final premium

Right of Salvage

A provision in property insurance policy requiring that after a payment of total loss to insured property, the insured must transfer the title or ownership to the property of the insurer

Risk

Uncertainty as to the outcome of an n event when two or more possibilities exist

Risk, Pure

The uncertainty or chance of a loss occurring in a situation that involves the opportunity for either loss or gain

Risk, Speculative

The uncertainty or chance of a loss occurring in a situation that involves the opportunity for either loss or gain

Robbery

The taking of property from another by using violence or the threat of violence

Salvage

The amount of money realized from the sale of damaged merchandise or property.

Settlement

The process by which an agreement is reached and a claim is resolved in liability insurance

Severability of Interests

A provision that insurance applies separately to each insured in a policy, treating each individual as the only insured

Sharing

A method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss who share the losses that occur within that group

Split

Separately stated limits of liability for different coverages, which may be stated on a per person, per occurrence, per policy period basis, or can be divided between bodily injury and property damage

Stated Amount

An amount of insurance scheduled in a property policy which is not subject to any coinsurance requirements in The event of a covered loss

Statute Law

The written law as enacted by legislative body, which generally takes precedence in cases where both common law and statute law apply

Stock Companies

Companies owned by the stockholders whose investments provide the capital necessary to establish and operate the insurance company

Strict Liability

A liability that refers to damages caused by defective products even though the manufacturer's fault or negligence cannot be proven

Subrogation

The acquisition by an insurer of an insured's rights against any third party for indemnification of loss or other payment, to The extent that the insurer pays the loss

Superintendent

The head of the state department of insurance

Surety Bond

A guarantee that debts and obligations will be carried out, and the benefits will be paid for losses caused by nonperformance

Surplus Lines

Insurance for which there is no readily available, admitted market

Theft

Any act of stealing or removing property form its rightful owner, encompasses both burglary and robbery

Third-Party Provisions

Insurance provision that address the rights of someone other than the policy owner to have a secured financial interest in the insured property

Tort

A wrongful act or the violation of someone's rights that leads to legal liability, intentional and unintentional

Transfer

A basic principle of insurance under which the risk of financial loss is assigned to another party

Umbrella Liability Policy

Coverage that provides extra protection against the liability, and excess amount of insurance above the primary policy

Unauthorized Insurer

An insurance company that has not applied, or has applied and been denied a certificate of authority

Underwriter

A person who evaluates and classifies risks to accept or reject them on behalf of the insurer

Underwriting

The process of reviewing, accepting, or rejecting applications for insurance

Unilateral Contract

A contract that legally binds only lone party to contractual obligations after the premium is paid

Underinsured Motorist Coverage

Auto coverage under which an insurer will pay up to limits if the liable driver's limits are exhausted and cannot pay the full amount for which they are liable

Uninsured Motorist Coverage

Coverage that allows collecting sums under which another driver would be liable to pay resulting from an accident when no coverage is carried

Unintentional Tort

The result of acting without proper care, generally referred to as negligence

Unoccupied

A property that has contents or furnishings in it, but not being lived in

Utmost Good Faith

The fair and equal bargaining by both ptaries in forming the contract, where the applicant must make full disclosure of risk to The Company and The Company must be fair in underwriting the risk

Vacant

A property that has no contents, furnishings, or occupants

Valued Policy

a policy used when it is difficult to establish The actual cash value of insured property after a loss because of its rarity or uniqueness, no regard to actual value or depreciation

Vicarious Liability

A type of liability in which one person is responsible for the acts of another; employers and employees parents and children

Waiting Period

Time between The beginning of a disability and the start of disability insurance benefits

Waiver

The voluntary abandonment of a known or legal right or advantage

Warranty

A material stipulation in the policy that if breached may void coverage

Workers Compensation

Benefits required by state law to be paid to an employee by an employer in The case of injury, disability, or death as the result of an on-The-job hazard

Twisting

A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage

Speculative Risk

The uncertainty or chance of a loss occurring in a situation that involves the opportunity for either loss or gain

Specific Insurance

A property insurance policy that covers a specific kind or unit of property for a specific amount of insurance